UK: RWE sells Lynemouth “coal to pellet” power plant to EPH

Jan 10 – RWE, Germany’s second-biggest utility, has agreed to sell its 420 MW Lynemouth coal-fired power plant in Britain to Czech-Slovak energy investment group EPH, it said on Thursday. No purchase price was disclosed for the 420-megawatt (MW) plant in northern England, bought by RWE in 2012.

The sale comes after the European Commission in December approved British plans to subsidise Lynemouth’s conversion to burn biomass instead of coal, a plan RWE at the time said would take 18 months. The conversion would increase wood pellet demand by about 1.5mn t/yr, a significant quantity in the European wood pellet sector.
A final investment decision on the plant is expected to be made in the next couple of months, EPH’s U.K. subsidiary, EP Invest, chief executive Neil O’Hara said. The converted plant is scheduled to begin operations in January 2018. EPH are according to Argus Biomass Market in the final stages of negotiations for the wood pellet supply.

Burdened by tens of billion euros of net debt, RWE is currently in the process of pooling its renewables, networks and retail divisions into a new entity, hoping to escape a crisis in fossil fuel-based power generation.

For EPH, it is the latest portfolio addition after agreeing last year to buy a 66 percent stake in Slovak power utility Slovenske Elektrarne from Italy’s Enel as well as E.ON’s coal- and gas-fired power plants in Italy. EPH owns the 1.9GW Eggborough power plant in Yorkshire, which is scheduled to close at the end of March. The plant had considered refurbishing to reduce emissions in order to stay on line — probably through coal-to-biomass conversion — but said last September that changes to capacity market rules mean that Eggborough no longer represented a “viable option to support life extension investment”.

RWE purchased Lynemouth Power Station, near Ashington, Northumberland from Rio Tinto in 2012.  The site has been owned by aluminium company Rio Tinto Alcan (formerly Alcan, now a part of the Rio Tinto group) since it opened in 1972 providing electricity to the Lynemouth Aluminium Smelter and the National Grid.